The California
Supreme Court yesterday ordered that a Woodland Hills attorney be suspended for
at least two years for violating ethics rules and a state statute in connection
with loan modification services.

The high court
adopted the State Bar Court Review Department’s recommendation in the case of Marilyn
S. Scheer. Scheer has been on involuntary inactive status since May of last
year, for failure to pay a fee arbitration award obtained by one of her
clients.

The Review
Department concluded in March that Scheer violated unauthorized practice rules
by handling loan modifications for 26 clients in 11 states where she is not
licensed. It further found that she violated California law by accepting fees
prior to completing her work on behalf of four loan modification cases.

Hearing Judge
Donald Miles found that she was culpable in all of those matters, as well as
two involving clients in Colorado. The Review Department disagreed as to those
clients, saying that Colorado rules allow an out-of-state attorney to practice
there under some circumstances.

Former Iowa
Lawyer

Scheer is a 1979
graduate of Drake University Law School in Iowa, and was admitted to practice
in that state that year. She was admitted in California in 1987.

She practiced
bankruptcy law at one time, later shifting to real estate and lending law at a
large firm where she was laid off in 2009, Presiding Judge Joann Remke, writing
for the Review Department, explained, Scheer started her own practice, Marilyn
Scheer Law Group PC, in August 2009.

She argued that
she violated no rules because the services she performed did not constitute the
practice of law and could have been performed by a layperson, and that even if
she engaged in the practice of law in other states, it was not unlawful because
loan modification services are governed by federal law.

But Remke, who
noted that Scheer was paid more than $120,000 in fees, said that even if
federal law governed the out-of-state activities, Scheer still collected the
money illegally because she is not admitted to practice in federal courts
outside Iowa and California.

Nor can she
claim she was not practicing law, when the fee agreements, and the letterhead
on which she communicated with clients, clearly said she was a lawyer,
identified her practice as “a California law corporation,” and said she was
providing “legal services,” Remke noted. The attorney also never explicitly
told her out-of-state clients that she was not licensed in their jurisdictions,
the presiding judge said.

Statutory
Violation

With respect to
the California clients, the jurist went on to say, the attorney violated the
Civil Code provision that says an attorney may not “claim, demand, charge,
collect or receive” payment for assisting a loan modification client until
“each and every service” for which the attorney is retained has been completed.

Scheer, Remke
explained, deposited client moneys into her trust account, then withdrew them
as the work progressed. That is a clear violation of the statute, the presiding
judge said.

Remke also
rejected Scheer’s argument that the statute places unconstitutional restraints
on the homeowner’s ability to retain counsel of choice. She cited the state
Supreme Court’s ruling upholding the constitutionality of contingency fee
limits in medical malpractice cases against a similar argument.

The penalties,
which include suspension for at least two years and until Scheer demonstrates
fitness to practice and refunds the fees, as well as three years on probation,
are reasonable, Remke said, in part because the attorney appeared not to
appreciate the seriousness of her actions.

“Her persistent
claim that her conduct is excused because she believes the law is
unconstitutional is less a creative legal theory than a refusal to accept
responsibility for deliberately violating the law,” the presiding judge wrote.

Remke also
distinguished a prior case in which an attorney who committed similar
misconduct was only suspended for six months. That case involved less money and
fewer clients, she explained.